If you've invested in cryptocurrency like Bitcoin or Ethereum (Ether), you want to be sure that it's stored safely. Trusting your Bitcoins or Ether to an exchange can carry significant risks, such as:
- A DDOS attack can make the site unavailable. During this period, you will have no access to your coins.
- Risk of theft from employee of the exchange.
- An exchange can be taken offline because of a government agency inquiry.
- Your account can be hacked.
- You have no insight into the security and backup methods of an exchange. What if an exchange’s server fails?
It is advisable to not leave your coins on a exchange for more than a day. To prevent all of these problems, you are better off saving your Bitcoins, Ethereum, or other altcoins offline. This storage method is also called “cold storage”. Because this method is completely offline, you run no risk of being hacked. A hardware wallet is a form of cold storage.
The primary principle of a hardware wallet is to ensure that your private key (the key that grants access to your cryptocurrency) is completely isolated from a computer or tablet, which, when connected to the Internet, is always sensitive to hacking. Nor do you run the risk of the above mentioned risks of saving your cryptocurrency on a exchange.
A hardware wallet isolates your private key from your computer or phone. The big advantage of a hardware wallet is that if you need access to, for example, your bitcoins, you can easily connect your hardware wallet to a computer. Because the hardware wallet has its own chip and the computer has limited access to the device, you do not run any risks with possible malware on your computer. The Ledger Nano S uses the same technology used for PIN payments or your SIM card. These ensure protection from physical attacks. The makers of the well-known Ledger Nano S come from an industry and have extensive experience in working on the security of these types of security chips, guaranteeing a high level of security.